Articles

When it comes to investing, there are two critical “bedrocks” we need to keep in mind. Everything else builds out from there.

They are:

1. Diversification cuts your risk of loss. The more diversification, the lower your risk.
2. In the long term, stocks and bonds make money, regardless of short-term volatility.

These two facts are why 95% of my favorite high-income investments, closed-end funds (CEFs), have made investors money over the last decade. Those include the 8.4%-yielding Adams Diversified Equity Fund (ADX).

ADX’s portfolio of large cap stocks includes Microsoft (MSFT), Visa (V), JPMorgan Chase & Co. (JPM) and Eli Lilly & Co.… Read more

The index huggers are, rightfully, fretting about the only position they own, the S&P 500, which is heavy on Nvidia (NVDA). The soon-to-be-fallen angel is the third largest component of the index at 6.3%.

“America’s ticker” SPDR S&P 500 ETF (SPY) yields only 1.2% and trades for 22-times earnings. The S&P SmallCap 600, meanwhile, which nobody owns, trades for a more reasonable P/E of 16.

And select small caps even pay serious dividends. I’m talking about yields between 9.1% and 14.7%.

But are these value stocks? Or are they merely cheap for a reason? Let’s explore a group of five small caps paying big dividends.… Read more

The spike in volatility we’ve seen in the last month has gotten me thinking a lot about the last decade—when bonds were a bust and tech ruled the day.

Put yourself back in that (seemingly innocent) time for a second.

If you had money to invest back then, you had one choice: stocks. With rock-bottom interest rates, bonds were a bust. And stocks—particularly tech stocks, which tend to do better when rates are low—soared.

You can clearly see the massive scale of the 2010’s tech surge in the chart below, with tech shown by the benchmark ETF for the sector, in purple.… Read more

Believe it or not, your favorite income strategist once had a multi-year stint as the head of human resources for a US-based software company.

It was, coincidentally, my last regular “day job” before I drifted into the world of stocks and startups.

When my old boss, our managing director, handed me the task of hiring our new employees, he gave me this piece of wisdom.

“I trust you to make the call. Just one thing…” he winked at me.

“The kids must be graduates from Berkeley, Cornell, MIT or Stanford.”

Gee, thanks boss. Like it was an easy task to convince a new graduate from an elite engineering school to skip the offer from Google to work with us.… Read more

We’ve all loved watching our dividend payers soar since the August 5 crash. (To be honest, we might have liked a bit more time to shop the bargains!).

But that’s investing. And I do have two pieces of good news on that front:

1. There are still some cheap—and growing—dividends on the table (we’ll name one below, as well as a “dividend dog” to dump right away if you own it).
2. This latest market bounce is broad based, as opposed to most of the last couple years, when tech was running the show: 

Good “Breadth” Bodes Well for More Gains

Here we can see the jump in the S&P 500 as a whole (in orange) versus its return on an equal-weight basis (in purple).… Read more

Just a week ago, I wrote to you about the dangers of investing in a tired investor go-to called the 60/40 portfolio.

You know the one—the so-called “rule” that you should invest 60% of your holdings in stocks and 40% in bonds to reduce your overall volatility.

But investing this way—according to arbitrary standards like 60/40—is a recipe for leaving money on the table, especially when we’ve got a terrific way to get a much bigger dividend stream from stocks, which we’ll get to in a moment.

Your Odds of Long-Term Profits in S&P 500 Stocks? 100%

I’m coming back to this topic so soon because I recently read Ben Carlson’s fantastic analysis of the 60/40 portfolio.… Read more

AI is in and energy is out. As usual. Which is just dandy for contrarian dividend investors like us.

Let’s talk about dividends up to 6.6% and stock prices that are dirt cheap. How cheap? Stocks trading for as little as half their sales!

The best time to buy energy is before the next supply shortage. I was just “upwind” of Hurricane Hone on the Big Island of Hawaii—‘tis the season for storms. Plus we have a volatile Middle East. And an economy that may get a bit of juice as the Federal Reserve begins to ease.

The 2020s, make no mistake, are a bullish decade for energy.… Read more

Think back just a couple weeks: The “yen carry trade” had investors running scared, and we had a terrific opportunity to buy stocks—better still our favorite income plays on stocks: closed-end funds (CEFs) yielding 8%+.

But wow, was that window brief! Stocks have more than recovered since, and are what I’d call highly valued, with a price-to-earnings ratio of around 27.5.

Let me be clear: I’m not saying stocks are overvalued: They’re likely to keep posting good returns because earnings are rising, and the economy is still dodging the recession we’ve been warned about for three years now.… Read more

How about two bold election predictions—and two payouts that will thrive regardless of the results?

My first forecast: Americans will still want to eat food after November. Inflation is a hot topic on the campaign trail, but this is not a bad time to be hungry. Grain prices—corn, soybeans and what—are as cheap as they have been in years.

As contrarian investors, this commands our attention. Farmers are planting less corn, soybeans and wheat. The acreage is going to more profitable crops. Or, nothing at all.

Remember, the cure for low prices is low prices. Cheap grain squeezes farmers, who plant less.… Read more

If you’ve been watching utility stocks over the last few months, you might think our chance to buy these big dividends is history.

It’s not: There are two still sweet utility deals on the board, offering both high dividends (up to 7%) and steadily growing payouts. Why are these bargains still available? We’ll get to that shortly.

First, let’s talk about why utilities have been at the top of our buy list this year: When interest rates fall, “utes” fly.

Most people see utilities as bond proxies, which is why they got crushed when rates spiked in ’22. Why bother with even low-volatility utilities when you can get a guaranteed near-5% payout from a 2-Year Treasury?… Read more